Minutes of the 1st meeting of Study Group on VAT & Consulate Generals held on 23rd April, 2012 received from Engineering Export Promotion Council India (EEPC India)

DMAI/CIR/9/2012-2013 14th June 2012

TO ALL MEMBERS OF THE ASSOCIATION

Dear Sir,

Re : Minutes of the 1st meeting of Study Group on VAT & Consulate Generals held on 23rd April, 2012 received from Engineering Export Promotion Council India (EEPC India)

We send herewith minutes of the 1st meeting of Study Group on VAT & Consulate Generals held on 23rd April 2012 received from Engineering Export Promotion Council India (EEPC India) for your information and necessary action, please.We also request you to send us immediately basic information in the prescribed format as mentioned in the minutes about VAT refund received/pending for our onward transmission to the concerned authorities for their doing the needful.

Shri Pankaj Chadha, Chairman, Committee on VAT welcomed the members and requested each one of them to introduce and after introduction Shri Pankaj Chadha elaborated on various problems exporters are facing with regard to VAT refund.

Shri Pankaj Chadha mentioned that he met Shri Sanjay Bhatia, Chief Commissioner of Sales Tax & VAT several times trying to convincing about the problems in VAT refund.He further mentioned that the exporters must give us the concrete points to be put to the Commissioner of VAT and suggest alternate procedure to claim VAT refund.He also mentioned that Shri Sanjay Bhatia is of the clear opinion that if the amount of VAT refund is matching on the computer then only refund will be made.

He further mentioned that in most of the cases the amount will not match because of following reasons :

1.Some of the vendor is filing their VAT refund on monthly / quarterly / six monthly basis.Therefore, if the purchaser is filing on monthly basis, the matching will not take place.

2.Certain unregistered members may not file VAT refund on-line which will further result in non-matching.

3.The VAT department expect the purchaser to get the VAT challan copy from the supplier, which is impracticalto get.

4.Shri Konal Doshi, Convenor – Gem & Jewellery Export Promotion Council (GJEPC), Mumbai mentioned that problem of non-refund taking place from last three years i.e. from 2008 onwards.Prior to that i.e. between 2005-2008 there was a manual system of VAT refund.He suggested that we must try to analyze the VAT refund process during manual period i.e. 2005-2008, in which there was no problem.He further mentioned that VAT department’s logic of putting owners or purchasers to prove that supplier has paid the VAT, is unacceptable.In fact, it is the VAT department’s duty to determine and ensure that VAT is paid.

5.He further suggested that there has to be a cut off period for refund by the VAT refund and in any delay should attract penal rate of interest.

6.He suggested that if the owners to prove on the purchaser then let purchaser deposit the VAT amount to the department as he cannot force the supplier/seller to deposit the VAT.

7.Shri Konal Doshi also mentioned that Gem & Jewellery sector purchase 70 – 80 per cent of their bullion from public sector banks who are not defaulters in submitting VAT challans.Even then such cases VAT department is not making any refund.

8.Shri Vinod Mandlik of Indian Merchants Chamber mentioned that if the purchaser is allowed to deposit VAT amount to the VAT department then the cascading effect which is the basic principle of VAT will not take place.Shri Milan Mehta, Director of Ayurvedic Drug Manufacturers’ Association, Mumbai, suggested that there should be some valid points / alternate suggestions that should come from member exporters.Shri Pankaj Chadha mentioned that a circular may be sent in the following format to members and invite suggestions from them.

1.

Name of the Company &

contact details

:

2.

Contact person along with contact details

:

3.

Amount of VAT refund claimed from the Government and date of filing of form 501 and date of receipt

:

4.

VAT refund amount received

:

5.

VAT refund amount pending

:

6.

Reasons for VAT refund pending

:

Members present agreed to collect this information from their members and get back to discuss and then fix up a meeting with Smt. Kavita Gupta, Additional Director General of Foreign Trade, Mumbai, who will further take up the issue with VAT Commissioner.

There being no other business the meeting then terminated with a vote of thanks to the Chair.